By Theron Larkins
Staff Writer
LIMESTONE — The Loring Development Authority met on June 11 for their regular board of trustees meeting. As the budget season progresses, board rooms like the one at LDA are working to balance out their books, as they dig deep into their projected revenues for the 2014-15 fiscal year.
In a memorandum from LDA CEO and President Carl Flora, he states that at a meeting held on May 29, the LDA’s finance committee reviewed projected results for the 2014 fiscal year and considered an operating budget for the fiscal year into 2015. As Flora explained the numbers on the budget, he began by pointing out in the section regarding expenses, revenue and the changes in net assets the one major difference fell in the utilities category, where the cost had risen $98,000 above the projected number.
“In the expenses column, the primary difference lies in the utilities line item, where we have a $98,000 item over budget, and that primarily reflects heating costs accumulated during this past winter,” said Flora.
Miscellaneous expenses will likely come in at about $55,000 below projections, while facilities and public works expenses are generally in line, except for in the heating oil section, which includes costs of propane and pellet heat, where there was a major increase in expected costs.
“This past winter was a very challenging one from a heating perspective. Heating degree days were up, snow plowing hours were sharply up, which consumes additional heat because of the number of door openings and cold vehicles returning to the shop building, and heating oil prices were higher than anticipated,” said Flora. “Finally, we incurred some one-time expenses for the initial fills of new propane tanks at the LDA offices and the Applied Technology Center. We will try to better manage our heating costs next year by purchasing more heating oil in August or September.”
In the same previously mentioned memorandum, as well as at the June 11 meeting, Flora also went into detail to recap the numbers and answer any questions regarding the proposed budget for 2015.
“With respect to the proposed fiscal year 2015 budget, various scenarios were considered, including the option of discontinuing the fire and ambulance arrangement with Limestone and Crown Ambulance,” said Flora. “While there would be considerable savings associated with that move, it would come at a cost to our development efforts.
At the May 29 finance committee meeting, various budget scenarios were discussed. Discussions focused on how to overcome significant revenue shortfalls in the current year and the next. Flora claimed, that the use of a $400,000 short-term loan would make up much, but not all of the shortfall; reducing expenses by closing the fire department would result in a net gain for the year. However, if the fire department were to close, the current arrangement for ambulance services would also cease. With the loss of first-responders on site, response times for fire and ambulance calls would increase.
The overall consensus of the finance committee was that an increase in response times may be a significant concern for current tenants and future prospects, and closing the department may also create a negative perception about Loring in general, which would complicate redevelopment goals.
Ultimately, LDA trustees decided that LDA has sufficient assets to sustain a moderate net loss in the next fiscal year and that current arrangements for fire and ambulance services at Loring should remain intact. Upon no further discussion by the finance committee, a motion was made by Richard Ezzy and seconded by finance committee Chairman Tom Clowes to recommend the budget as presented for approval. The proposed budget included a $400,000 term loan and keeps the fire department in place with a projected year-end loss of $77,900. The motion was voted on and passed unanimously.
Before the conclusion of the May 29 meeting, Flora stated that substantial changes in LDA’s revenue stream have occurred since the last long-term plan was developed. A new plan for sustaining Loring’s $73 million in assets is needed. The assets support current jobs and continue to hold significant potential for new development. The recommendation was to present a plan to work to develop a new long-range financial plan to the board of trustees on June 11.
“A new plan would correct some assumptions that are no longer valid — in particular, that our federal entities, DFAS and Job Corps, would make annual service fee payments in the amount of $210,000 and that Maine Military Authority’s (MMA) annual lease revenues would continue to total more than $300,000 over the current projections,” stated Flora. “A new long range plan will take account of our capital needs and will illustrate the difference between what we have available and what we need. In anticipation of that, I have developed a very rough estimate of capital needs we will have over the next 15 to 20 years. For strategic reasons, we have been working with Midcoast Regional Redevelopment Authority (MRRA) to encourage a voter-approved statewide bond issue with a “Jobs and Community Reinvestment” theme. This did not gain enough traction to be approved by the legislature last session, but LDA and MRRA must continue to advocate for a bond issue to support military base infrastructure.”
The following is a list of capital needs LDA is projecting over the next 15 to 20 years. The internal estimate of cost is only a preliminary indication of the magnitude of the issue. With the assistance of an engineer, Flora claims LDA could generate a more precise estimate based on a more thorough evaluation of the condition of various infrastructure items.
• Sewer collection system – $3,500,000
• Water treatment and distribution system – $1,500,000 (This would include complete upgrades to Madawaska Dam plant and distribution system to assure potable water supply to Loring users. Ideally, LDA would like to have a system that is flexible and capable of delivering large or small quantities of water commensurate with the level and type of development in place. Funds currently available and recently expended in connection with the EDA project may not completely solve the issue, as LDA is currently experiencing quality issues with current low levels of water use. LDA officials are considering taking additional measures, such as a supplemental groundwater source, or an in-tank aeration system to reduce interaction between chlorine and organic matter.)
• Paint two water towers between 2020 and 2025 – $1,500,000
• Repair or replace as needed water mains and laterals, underground valves, storage tank; booster station control system and other water system buildings and infrastructure – $2,000,000
• Buildings demolition. Buildings 5050, 5300, 5301, 6000, 6250, 3510, 5001; miscellaneous small structures, approximately 325,000 square feet. – $2,000,000
• Building (boilers) – $1,200,000 (Many buildings have boilers that were new in the 1990s, which will reach the end of their useful life in five to 15 years.
• Buildings (general) – $4,000,000 (New roofs, siding, windows, doors, paint, brickwork, lighting electrical and parking lot pavements.
• Road replacement – $5,500,000
• Vehicle and equipment replacement – $1,000,000
Grand Total: $22,200,000 (In 2014 dollars).
